OECD and the Seoul G20 Summit 2010

The Seoul G20 Summit on 11-12 November 2010 continued to tackle the key issues addressed at previous Summits - development, global trade, balanced growth, financial sector reform, employment and social policies, taxation and the fight against corruption.

Since the launch of our Strategic Response to the Crisis in December 2008, the OECD has been supporting the G20 on issues including labour, investment, taxes, business ethics and trade finance.

The economic policy challenges facing the G20 leaders were set out by the OECD in a study released ahead of the forthcoming Economic Outlook, as a follow-up to the G20 statement on a Framework for Strong, Sustainable and Balanced Growth.

Through its analysis and peer review process, the OECD has developed a comprehensive range of strategies to restore economic growth through structural reforms and innovation. The OECD is also looking at the effectiveness of the emergency stimulus measures, their impact on public finances and at how they can be unwound in the future.

Bolstering economic confidence requires an ethical and transparent climate for business and government and a level playing field for investment. It requires good governance, with coordinated initiatives to promote corporate responsibility and financial education, and to fight bribery and corruption.

Many countries are looking to "Green growth" that is sustainable and creates jobs as a way out of the crisis. The OECD has started working on a green growth strategy to promote clean technologies as a way both of reinforcing economic activity and of protecting the environment.

Innovation, the bedrock of a dynamic economy, will be crucial to achieving green growth. The OECD is looking at the conditions required to stimulate and maintain innovation – particularly in science and technology. Results will be developed into an innovation strategy.

Open markets play a pivotal role in supporting growth and job creation, says a new joint report by the OECD, the ILO, the World Bank and the WTO. But, it adds, trade opening must be complemented by properly designed domestic policies, including employment and social protection policies to ensure that benefits from trade are widely shared.

“Foreign exchange intervention is not the most helpful instrument for macro-economic management,” OECD Secretary-General Angel Gurría said. “It can prompt countervailing intervention and may trigger new protectionist responses.”

G20 leaders must remain vigilant against the risk that tensions over current account imbalances could slow investment or degenerate into a protectionist spiral. In their fourth joint report to the G20, the OECD and UNCTAD find that most new investment measures taken from mid-May to mid-October by governments were aimed at facilitating and encouraging investment flows.

Providing government-backed finance to help exporters is seen as an important way of stimulating trade. The OECD is hosting regular meetings to exchange information and monitor progress in the 36 countries which have agreed to co-ordinate export credit policy to help boost trade and investment during the crisis.

OECD countries need to create 17 million jobs to get employment levels back to where they were before the crisis. The OECD’s Employment Outlook 2009 argues for a co-ordinated policy response to the crisis by reinforcing social safety nets and enhancing activation policies such as training and job search assistance.

Young people are likely to be hit hardest by the worsening job market. Jobs for Youth: France is the latest in a series of reports looking at youth unemployment in specific countries. OECD work on measuring educational and skills attainment (the PISA and PIAAC programmes) is concerned with equipping people for the 21st century economy – a key topic on the Pittsburgh agenda.

Youth unemployment is set to keep rising in the months ahead. The OECD says more needs to be done to help young people find work and avoid falling into a “lost generation”.

"The short-term labour market outlook is not rosy and countries face a serious risk of a jobless recovery”, said the OECD Secretary-General at the G20 employment ministers' meeting in Washington.

“The short term prospects for youth unemployment in the OECD countries remain rather gloomy”, according to an OECD working paper. Unemployment among young people is set to keep rising in the months ahead and stay at the same high double digit level across the OECD to the end of 2011. “Many unemployed youth are likely to experience a prolonged period of joblessness.”

Some governments have implemented specific policies to help the young unemployed but more measures are needed, especially for those with poor education and skills. These “at-risk” youngsters now account for between three and four out of ten of all young people in the OECD and are at risk of long-term joblessness and reduced earnings.

Tax transparency

The November 2008 G20 Summit gave strong political impetus to tackling tax evasion. Since then more than 90 Tax Information Exchange Agreements have been signed by countries and jurisdictions. The OECD is at the forefront of the fight against harmful tax practices and has been charged with monitoring progress and carrying out reviews of the countries and jurisdictions comprising its Global Forum on Taxation.

The work on fossil fuel subsidies by the international organisations was in response to a request by G-20 Leaders when they met in Pittsburgh in September 2009. At that time, leaders agreed to “rationalise and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption”. They asked the OECD together with the IEA, OPEC and the World Bank to “provide an analysis of the scope of energy subsidies and suggestions for the implementation of this G20 country initiative." The Joint Report was presented to the G-20 Toronto Summit in June 2010. » Read: Read the G20 report

New analysis by the OECD based on data from the IEA estimates that ending fossil fuel subsidies could cut global greenhouse gas emissions by 10% from the levels they would otherwise reach in 2050 under “business as usual.” It argues that governments must fight the temptation to exempt certain energy-intensive industries from full compliance with carbon pricing scheme. » More on this issue: www.oecd.org/g20/fossilfuelsubsidies

Development

The OECD monitors development aid and helps design policies to ensure it is effective in relieving poverty and in making developing economies more resilient.